Based on 96 CIO appointments during 1987–1998, Chatterjee et al. (2001) conclude that newly created CIO positions add value to the firm. This paper reexamines that conclusion by using the market's reaction to existing position appointments to benchmark the market's reaction to newly created position appointments. Based on 461 CIO appointments to new and existing CIO positions during 1987–2002, we find no significant difference in the market's reaction to the two types of announcements over the entire sample period. This finding holds when we allow for the market's perception of the value of information technology to shift over time. We also find evidence that the market penalizes firms that fail to move quickly enough to obtain potential strategic advantages from new CIO positions, consistent with first mover advantages. Finally, consistent with Ang et al. (2003) who examine CEO appointments, we find that markets discriminate among newly appointed CIOs in that CIO quality characteristics are associated as expected with the market's reaction to appointment announcements.
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Spring 2007
Research Article|
March 01 2007
The Effects of Information Technology Expertise on the Market Value of a Firm
Ashraf Khallaf;
Ashraf Khallaf
American University of Sharjah.
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Terrance R. Skantz
Terrance R. Skantz
Florida Atlantic University.
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Online ISSN: 1558-7959
Print ISSN: 0888-7985
American Accounting Association
2007
Journal of Information Systems (2007) 21 (1): 83–105.
Citation
Ashraf Khallaf, Terrance R. Skantz; The Effects of Information Technology Expertise on the Market Value of a Firm. Journal of Information Systems 1 March 2007; 21 (1): 83–105. https://doi.org/10.2308/jis.2007.21.1.83
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